The Growth Spurt – How Companies Go From Big Ideas To Big Deals
It’s every CEOs dream: one day you’re at the helm of a bright young start-up with a great product that is gathering momentum and before you know it you’re steering a unicorn through the intergalactic business space. Although the herd of unicorns number small in the scheme of things, business leaders today can nevertheless learn a great deal about how companies like Uber, Airbnb and Etsy went from tiny entrepreneurial projects to massive global companies.
The first important concept to understand here is scalability. Without scalability, Uber is just another small-time cab firm. But by being accessible to anyone with a smartphone, it becomes a behemoth. It needed affordable technology and a slick and easy-to-use platform, and by focusing on the supply side of the equation, it knew that the demand would follow. Similarly, Airbnb focused on creating beautiful content on their platform by hiring professional photographers to improve the look of listings. They focused on supply, knowing that demand would eventually follow.
Putting supply first also means that these companies could constantly improve on the UX as they could identify early in the process what worked and what didn’t and adapt accordingly. It’s only now, as these companies reach truly immense size, that the focus has shifted towards generating demand. So how did they go from a small customer base to a global one in literally no time at all? The answer is smart digital marketing. They eschewed the traditional forms of marketing such as TV and print ads and instead focused their efforts on digital media. Google ads, Facebook ads, Youtube ads – all based on platforms whose audience was familiar with the sort of technology that the likes of Uber and Airbnb was presenting them with. It was also targeting a millennial audience that bought into the sharing economy even if they didn’t quite know it yet.
Furthermore, digital advertising was significantly cheaper than those traditional forms just mentioned, but importantly, it is also trackable. Uber used demographic data to successfully identify the types of people who could be interested in becoming drivers and then created ads to target them specifically. The shift from a supply to a demand focus occurs when the early adopter phase is complete and the company begins to attract new customers from digital marketing and social media. It’s at this point in the company trajectory that a poor product will not be tolerated, but given the previous supply focus, it should be a given that the product has been sufficiently tweaked and improved to offer the best possible UX, or there or thereabouts. Importantly, a brand must then listen to its customer base. This sounds like a simple concept but in actual fact it can be very easily overlooked, especially considering that up to now, all efforts were focused inwards on product, rather than outwards on customer.
It’s here that appointments become critical. All too often we here about tech start-ups that showed great promise, only to reach this stage, not improve personnel, and fall by the wayside. A great CIO or CMO will be able to put in place a feedback structure whereby the company can actively respond to customer demands in a timely manner. As we have found in the past companies need to recruit well ahead of where they want to be or risk recruiting today and not tomorrow’s leader.
The next key factor behind explosive growth companies is expansion and this comes back to the scalability point I made earlier. Uber was able to ramp up its operations so quickly because it had a business model that could be deployed in just about any city in the world (let’s not mention London shall we?!). Ok, so it came up against some obstacles in certain places, but ultimately the platform it had created filled a huge gap in the market. So what’s the lesson? Well, even if you have a product that isn’t global in nature, prove your business model in one location, analyse to death why it works there, and only then look to replicate in similar locations. As CEO Travis Kalanick has said: “After a platform finds a formula that works, it needs to distill the formula into principles, catalysts, and a to-do list to transfer the formula to managers it hires to expand in different regions or industry verticals.”
If your company has a scalable product but you are unsure of the next steps, get in touch for a confidential chat. Our expertise is in matching the right senior management people with the best companies at the critical time. Call +44 (0) 203 675 1459 or email Orlando Martins at email@example.com.